Japan’s economy contracts as US tariffs hit exports

Japan’s economy contracted 1.8% annualised in July–September, dragged down by US tariffs on exports. Quarter-on-quarter GDP fell 0.4%, with exports down 1.2%. Imports slipped 0.1% and private consumption edged up 0.1%. Political uncertainty eased after a new prime minister.

Tokyo: Japan’s economy sank at an annualised rate of 1.8 per cent in the July-September period, government data showed on Monday, as President Donald Trump’s tariffs sent the nation’s exports spiralling.

On a quarter-by-quarter basis, Japan’s gross domestic product, or GDP, or the sum value of a nation’s goods and services, slipped 0.4 per cent, in the first contraction in six quarters, the Cabinet Office said.

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The annualised rate shows what the economy would have done if the same rate were to continue for a year. The fall was still smaller than the 0.6 per cent drop the market had expected.

A big decline during the quarter came in exports, which were 1.2 per cent down from the previous quarter.

Some businesses had sped up exports, when they could, to beat the tariffs kicking in, inflating some of the earlier data for exports.

On an annualised basis, exports dropped 4.5 per cent in the three months through September.

Imports for the third quarter slipped 0.1 per cent. Private consumption edged up 0.1 per cent during the quarter.

Tariffs are a major blow to Japan’s export-reliant economy, led by powerful automakers like Toyota Motor Corporation, although such manufacturers have over the years moved production abroad to avert the blunt of tariffs.

The US now slaps a 15 per cent tariff on nearly all Japanese imports. Japan also faced political uncertainty recently, until Sanae Takaichi became prime minister in October.